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CapitalPress.com
January 15, 2016
Dairy feed costs down in 2015
By CAROL RYAN DUMAS
Capital Press
U.S. dairies, cost of production
(Dollars per hundredweight of milk)
Feed costs on U.S. dair-
ies were down an average
of $1.37 per hundredweight
of milk January through
October compared with the
same period in 2014, run-
ning $11.93 compared with
$13.30, according to the
USDA cost of production re-
port.
Lower feed costs large-
ly contributed to the $1.61
decrease in operating costs
and a $1.45 decrease in total
costs during that time period,
according to the report.
But milk prices were
also down, with federal or-
der Class III prices in all of
2015 averaging $15.80 per
hundredweight, down $6.54
compared with an average of
$22.34 in 2014.
Income over feed costs for
Class III milk from January
through October was $4.05
Item
Total operating cost
Allocated overhead*
Total cost
October
2014
2015
$15.28
8.68
23.96
$14.83
9.05
23.88
Jan.- Oct.
2014
2015
$16.48
8.40
24.89
$14.87
8.57
23.44
*Includes hired labor, opportunity cost of unpaid labor, capital recovery of machinery and
equipment, opportunity cost of land, taxes and insurance, and general farm overhead.
Source: USDA ERS
Capital Press graphic
per hundredweight, less than
half the $9.10 average for all
of 2014.
Lower feed costs are “ab-
solutely helping, but it’s not
enough to make up for the
decline in milk prices,” said
Sarina Sharp, market analyst
for the Daily Dairy Report.
The industry is nowhere
near the bleak situation of
2009, when milk prices were
several dollars lower and
feed costs were substantially
higher, she said.
Markets vary and mar-
gins are generally slim but
adequate in the Midwest —
with expansion limited by
capacity rather than budget
— and below break-even in
the West, where producers
are tightening their belts, she
said.
Cost of production de-
clined consistently through-
out 2015, which was some-
what remarkable. Large
global supplies of corn and
soybeans saw prices continue
to slip after harvest, she said.
“Global supplies really
are big,” she said.
Back-to-back good pro-
duction in recent years and
higher expected production
and exports in South Ameri-
ca in 2016 should keep feed
costs low in the year ahead,
barring any weather issues
or surprising uptick in de-
mand, she said.
Where milk prices will
go is the million-dollar
question. But given the large
inventories of dairy prod-
ucts and continued strong
milk production in Europe, it
could be a while before pric-
es rebound, she said.
Some analysts are saying
prices could start to rebound
in the second half of the
year but there would have to
be slower milk production
growth in Europe and the U.S.
— or an increase in demand,
largely in China’s appetite for
milk powder, she said.
PVMI sees growth in potato royalties
By JOHN O’CONNELL
Capital Press
BEND, Ore. — An orga-
nization that handles licens-
ing and royalty collection of
potato varieties developed in
the Northwest had its best
year in 2015, and officials
say it’s poised for greater
growth in the next few years.
The nonprofit Potato
Variety Management Insti-
tute gave royalties totaling
$536,000 in December to the
potato breeding programs of
University of Idaho, Oregon
State University, Washing-
ton State University and the
USDA’s Agricultural Re-
search Service, said PVMI
Executive Director Jeanne
Debons.
Formed in 2005 by the
potato commissions of Or-
egon, Idaho and Washing-
ton state, PVMI collects a
quarter per hundredweight
in royalties for its varieties
raised within the Tri-state
region, 50 cents for varieties
raised elsewhere in the U.S.
and $1 for varieties raised
abroad.
Debons said royalties
were down in 2014, when
PVMI collected $326,000,
compared with $408,000
during the prior year.
PVMI, which wrote its
first royalty checks in 2009,
has contributed $1.686 mil-
lion to breeding programs
to date, plus more than
$200,000 to support pro-
grams such as the UI Potato
Lab. The organization also
covers its own operating
costs — roughly $130,000
per year — and has more
than $500,000 in reserves.
PVMI’s top varieties for gen-
erating royalties are Alturas,
which has generated $1 mil-
lion, Classic Russet, which
has generated $417,000, and
GemStar Russet, responsible
for $259,000.
During 2015, McDon-
ald’s approved the PVMI va-
riety Blazer Russet for use in
making its fries in the East-
ern region of North America.
McDonald’s quality systems
director Mitch Smith said
Courtesy of PVMI
Jurgen Bruer, an official with the German potato processor Agrarfrost, examines a new potato variety
raised in research fields at the University of Idaho’s Aberdeen Research & Extension Center in August
2015. Bruer’s company has plans to conduct large-scale field trials of several Pacific Northwest potato
varieties this season.
during a speech at the Na-
tional Potato Council’s 2015
Potato Expo, and the com-
pany is considering PVMI’s
Clearwater Russet.
Smith said Clearwater
is especially intriguing be-
cause of its “sustainable at-
tributes in terms of lower in-
put use as well as low sugars
and, in some cases, higher
yields.”
He said McDonald’s va-
rieties must undergo a rig-
orous approval process in-
volving the supplier making
a business case, careful anal-
ysis of yield and attributes,
screening by a sensory team
in Oakland, Calif., further
reviews by panels, reviews
by management and a team
of owners and operators
from throughout the country
and consumer testing.
Smith said there are only
four varieties that now meet
McDonald’s “gold stan-
dard,” and concerns about
texture and flavor are the
most common reasons why
varieties fail to gain approv-
al.
“Typically what we see
is the texture has been too
smooth or pasty,” Smith said
during the Expo. “We’re
looking to get that nice
baked potato texture. The
other would be musty and
old potato flavors, or too
strong potato flavors.”
Debons declined to com-
ment specifically about Mc-
Donald’s plans but said she
expects an upturn in Blazer
planting this season, espe-
cially in Maine.
Jonathan Whitworth, a
potato scientist with US-
DA-ARS in Aberdeen, Ida-
ho, believes the breeding
programs are better meeting
the industry’s needs because
processors have begun coop-
erating much earlier in the
breeding process.
“We get more real-time
feedback of specifications
that are needed to make a va-
riety successful,” Whitworth
said, adding developing va-
rieties that require less in-
puts to raise is a top industry
concern.
Debons said PVMI is also
poised to see growth in its
varieties internationally.
“We had calls from Tur-
key. They wanted to try out
Clearwater, so we’re or-
ganizing that this coming
year,” Debons said.
She said Jurgen Bruer,
an official with the German
potato processor Agrarfrost
who has large field trials
of several PVMI variet-
ies planned for 2016, also
toured the Northwest potato
industry last summer.
Don Jenkins/Capital Press
Steam rises from the KapStone Paper and Packaging Corp. plant
in Longview, Wash. Gov. Jay Inslee’s administration has proposed
capping and reducing greenhouse gases emitted by manufac-
turers. The rule would apply to a fertilizer maker and two food
processors in Eastern Washington.
Inslee’s administration
lifts lid on carbon cap plan
Fertilizer maker,
food processors on
‘polluters’ list
By DON JENKINS
Capital Press
Washington Gov. Jay Ins-
lee’s administration Wednes-
day proposed capping and
reducing greenhouse gas
emissions from 70 oil refiner-
ies, fuel importers and man-
ufacturers, including a fer-
tilizer maker in Kennewick
and two food processors in
Othello.
The state Department of
Ecology, which wrote the
rule at Inslee’s direction, said
the carbon cap would limit
damage climate change to
agriculture, coastal commu-
nities and municipal water
systems.
“It’s important that we
act now to protect our water
supplies, infrastructure and
economy for future genera-
tions,” DOE Director Maia
Bellon said in a written state-
ment.
DOE plans to circulate the
proposal for public comment
before adopting a final rule
by summer.
Todd Myers, environmen-
tal director for the conserva-
tive Washington Policy Cen-
ter, called DOE’s plan the
“most backward approach to
this issue that can be imag-
ined.”
“Assuming you want to
reduce carbon, regulation is
the least rational and most
expensive way to do it,” he
said.
When in full force by
2020, the rule would cap
greenhouse gases from sourc-
es responsible for 65 percent
of the state’s carbon output,
according to DOE.
The rule would initially
apply to businesses and two
public institutions that emit at
least 100,000 metric tons of
carbon annually. They would
be required to roll back their
current emissions by 5 per-
cent every three years.
The threshold gradually
would lower to 70,000 met-
ric tons by 2035, potentially
bringing more businesses
into the program.
Agrium Kennewick Fertil-
izer and food processors J.R.
Simplot and McCain Foods
are among the operations that
will be immediately affect-
ed by the rule, according to
DOE.
Because the companies
use lots of energy and do
business internationally, all
three probably would have
until 2020 to prepare for op-
erating under a cap.
Agrium U.S. spokesman
Paul Poister said the com-
pany participated in several
meetings with DOE last year
and appreciates the depart-
ment’s willingness to lis-
ten to energy-intensive and
trade-dependent industries.
“We are equally commit-
ted to reducing air emissions
and share the governor’s goal
to protect air quality as much
as possible,” Poister said in
an email. “We look forward
to fully reviewing the draft
with an eye toward its poten-
tial impact on our facility and
sharing our assessment with
the administration.”
Simplot spokesman Ken
Dey said the company was
reviewing the proposal, but
had no further comment.
Efforts to obtain com-
ments from McCain Foods
were unsuccessful.
Companies that exceed
their carbon caps could be
fined $10,000 a day, accord-
ing to DOE.
Besides cutting their
emissions, businesses could
fulfill their obligations by
buying surplus carbon cred-
its from other manufacturers
or pay for carbon-reduction
projects, such as anaerobic
digesters at dairies to convert
manure into renewable elec-
tricity.
DOE energy specialist
Bill Drumheller said the
department wanted to give
businesses multiple ways to
comply with the rule.
Myers said DOE’s plan
would reward companies for
suspending Washington op-
erations and selling their car-
bon credits.
“Their plan actually pays
for taking jobs overseas, but
punishes for keeping jobs
here. If you stay, your costs
go up,” he said.
DOE’s list of “carbon pol-
luters” includes the Univer-
sity of Washington’s Seattle
campus and the military’s
Joint Base Lewis-McChord.
Inslee ordered DOE to
write the carbon cap rule af-
ter state lawmakers rejected
his proposal to create a cap-
and-trade program.
DOE’s proposal would set
a cap, but unlike Inslee’s leg-
islative proposal, would not
require businesses to bid for
emission credits.
Ecology cancels E. Wash. water quality meetings
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The Washington State De-
partment of Ecology has can-
celed three Eastern Washington
meetings slated to discuss wa-
ter quality, citing low response
to its offers of technical and fi-
nancial assistance.
The department had planned
agriculture water quality stake-
holder work group information
sessions Jan. 26-28 in Walla
Walla, Wash., Fairfield, Wash.,
and Pullman, Wash..
Kelly Susewind, special as-
sistant to the director for Ecol-
ogy, said the department has
been working closely with agri-
culture partners to schedule and
develop workshops to share
information about watershed
surveys in 2015 and anticipated
in 2016.
“The response rate to our
2015 technical and financial as-
sistance offers was much lower
than we anticipated.” Susewind
said. “So rather than identifying
new sites with additional water-
shed surveys, we have decided
to focus our energy on high
priority sites identified in past
years.”
In an email to members of
the department’s agriculture
and water quality advisory
committee, Susewind said the
department decided against
conducting a new evaluation
and potentially adding new
sites.
Toni Meacham, a Connell,
Wash., rancher and attorney,
said she suggested Ecology
offer outreach education meet-
ings with technical service pro-
viders instead of canceling the
meetings. Agriculture stake-
holders held a meeting in Octo-
ber that was well-received and
provided information based on
peer-reviewed sound science,
she said.
“DOE is not basing their site
visits on scientific evidence and
they need to do that,” Meacham
said. “As landowners become
aware of what science shows,
that good land management
and good grazing plans actually
improve water quality, they are
less likely to accept DOE’s plan
of fencing. Many have started
working with technical service
providers instead.”
With the shift in focus,
Ecology and its partners agree
a change in approach to the
workshops is “appropriate,”
Susewind said.
“We’ll continue to work
with our partners to identify
and connect willing landown-
ers with the tools and resources
available,” he said. “Our goal
is to make real progress on the
ground protecting clean water
and supporting healthy farms.”
Education remains critical,
Meacham said, as does open
communication between the
department and the industry.
“Water quality isn’t a goal
that is exclusive to DOE,” she
said. “Water quality is import-
ant to landowners as well, but
we ask for balance and sci-
ence-based solutions.”